United Cacao (LSE:CHOC) Chief Executive Officer Dennis Melka caught up with DirectorsTalk for an exclusive interview to discuss how the lack of supply of cacao will benefit the company and their ongoing plans for 2015
Q1: You’ve just returned from the Cocoa Merchants Association of America conference in Miami, what did you learn there?
A1: There was a great selection of speakers there and what’s really fascinating, from the whole collection of speakers from the processing to the end users i.e. the large confectionary companies, is that there is clearly concern about supply and when they go into the numbers in terms of West Africa, which is dominating the industry, is that you had a shocking development in Ghana over the last few months where year-to-date production is down almost 25%. The other one is Indonesia, it really appears that Indonesia will struggle to maintain its current volume. So if you look at the top 3 producers of cacao in the world; Cote d’Ivoire, Ghana and Indonesia, you’ve got 2 out of the 3 really in a difficult position to maintain their current output levels so obviously as a producer of cacao, what we feel is the low cost location, we think that’s a very interesting development and bodes well for prices over the long term.
Q2: With your area of the market, there’s a lot of specialists now coming into the field with greater pricing power, is that something that you’re going to be going into as well?
A2: Our focus is on the mass market as that’s where the demand is, if you look at 90% of cacao, cocoa beans are going into mass market products; basic chocolates, flavourings and ice-creams and patisseries. Only a small segment is fine flavour cacao so we’ve geared our plantation to focus on that bulk market and we do have some fine flavour and we do hope to get a premium for those sales but really we’re focussed on the mass market and that’s where the opportunity is.
Q3: How is the Lima dual listing progressing at the moment?
A3: Very good. We’re still going through that process, we’ve submitted all the paperwork and no change to what we told the market earlier, we are hoping to get it done in the first quarter, there’s a risk it drifts over into April but it’ll happen in due course, we’re quite confident.
Q4: Finally, your company detailed the 2,000 hectares of planting target by December, how is this progressing and is it still on track?
A4: Absolutely. There’s no change from what we told the market earlier, we expect to have over 2,000 hectares by the end of this year. We believe that makes us the largest, if not one of the largest, in the world and in Latin America so we’re very excited. We’ve got a great team on the ground, we have almost 600 jobs and these are 600 jobs that didn’t exist before so it makes a tremendous impact in the local community and everything is going quite well, we’re excited.
